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By Marilyn Odendahl
The Indiana Citizen
August 23, 2024

Maxine Thomas knows that following the policy debates in Congress is a luxury many working families cannot afford.

They are spending their time stretching their paychecks to cover the rent, keep the lights on and put food in the refrigerator. Often, Thomas said, families are not well-versed or up-to-date on the decisions Congress is making and do not learn what is happening, even when the policy being debated directly affects them, until Capitol Hill has already decided what to do.

Thomas, food resource center program manager for the Indy Hunger Network, is doing what she can to change that.

Her focus is raising awareness about the child tax credit, a federal tax break especially for low- and middle-income families. The Tax Relief for American Families and Workers Act of 2024, which includes a three-year expansion of the child tax credit, has stalled in the U.S. Senate, but, Thomas said, she is sharing information about the CTC even with people who are not interested in “political jargon.” She believes if constituents become knowledgeable and start pressing for action, lawmakers will move the bill forward.

“For those that oppose the child tax credit, I understand that there’re a lot of different technicalities when it comes to why it wouldn’t work or the reason why we shouldn’t,” Thomas said. “But, I’m telling you that you’re doing more harm than good if you believe that this is not going to be able to help those families that are already working, those that are already out there working hard to make a better community for everyone to live in.”

Although the child tax credit has been around since 1997 and always received bipartisan support, the proposed expansion of the tax break has gotten snagged in election year politics. Republicans and Democrats in the House joined together in January to pass the Tax Relief Act by a resounding 357 to 70 vote, but the bill has languished in the Senate, and a recent unsuccessful attempt to move the legislation forward drew the ire of GOP lawmakers.

David Plasterer, senior associate of U.S. poverty policy for the Washington, D.C.-based nonprofit RESULTS, is not surprised that the bill has gotten entangled in “tons of politicking happening on both sides” since this is an election year, but he is disappointed the child tax credit has stalled.

“It’s really frustrating as somebody who works in policy,” Plasterer said, noting the bill’s passage in the House was the summation of more than a year of policy advocacy and working with Congressional leaders on both sides of the aisle to find substantive policy agreement. “Just to see what was a really hard, negotiated, bipartisan policy agreement being sort of thwarted by election year politics” was disheartening, he said.

Lifting families out of poverty

The tax relief bill was introduced by House Ways and Means Committee Chair Rep. Jason Smith, R-Missouri, and Senate Finance Committee Chair Sen. Ron Wyden, D-Oregon. Key to the child tax credit expansion are structural changes that would, in part, provide a per-child phase-in, so low-income families would receive the same credit for each child just as higher-income families already do, according to an analysis of the bill by the Center on Budget and Policy Priorities.

When the expanded tax credit is fully in effect in 2025, the CBPP concluded, at least 500,000 children would be lifted above the federal income poverty line and about 5 million more children would be “less poor.”

In the House, five of Indiana’s seven Republican representatives joined the state’s two Democratic representatives in voting for the tax relief bill. However, as this election year has progressed, the bill’s path to passage has narrowed. Senate Democrats’ push for cloture vote earlier this month fell short of the 60 votes needed and Majority Leader Sen. Chuck Schumer, D-New York, had to switch his vote to “no” in order to keep the bill alive.

Republican lawmakers in the upper chamber accused Democratic leadership of playing politics by using the procedural vote just to portray them as voting against help for working families. Sen. Todd Young, R-Indiana, echoed that in a statement to WRTV-6 following the Senate vote.

“I am generally supportive of this bill’s goals,” Young said. “Unfortunately, today’s vote was not a serious effort to pass a bipartisan tax bill. This was a rushed process designed to score a political point for Senate Democrats.”

Andrew Bradley, senior director of policy and strategy at Prosperity Indiana, said while Congress fights over politics, the underlying economic problem the child tax credit is meant to address is just getting worse.

The child tax credit bill, which would provide relief to families making up to $400,000 annually, would be a direct benefit for about 326,000 Indiana families with children, Bradley said. It would help one in four Hoosier children living in rural communities and one in five Hoosier children living in metro areas.

“While not necessarily universal in its impact, those are really significant numbers,” Bradley said of the stats linked to the child tax credit. “Twenty-five percent of poor rural Hoosier children would have the opportunity to be lifted out of poverty and given the benefit of lifelong economic opportunity, and for that chance to go by in the Senate, it’s really kind of a tough pill for Hoosiers to swallow.”

The tax relief would help buffer a family’s finances against the cumulative effect of rising prices, Bradley said. Families could put the extra money toward basic household expenses, he said, like school supplies, property taxes, or rent, food and utilities.

Moreover, Bradley said, the tax relief bill also contains a provision to boost affordable housing. The bill would create 2,200 new affordable rental homes in Indiana, which would support 3,320 Hoosier jobs and generate $375 million in wages and business income, he said, citing to an analysis from Novogradac, the professional services firm.

Indiana families need the financial boost, Bradley said. Not only does the state have a shortage of nearly 140,000 affordable and available rental homes for extremely low-income families, but also 14 of the 20 most common occupations of Hoosiers do not pay the $22.07 an hour needed to pay the rent for a two-bedroom apartment.

Like Thomas, Bradley believes constituents can push Congress to pass the child tax credit.

“It’s August of 2024, we’re about to go into an election season and this is a time when Hoosiers, themselves, can help raise these issues of economic opportunity and housing affordability with candidates,” Bradley said. “They can ask candidates if they would support provisions like a child tax credit and expanding affordable housing and make sure that the candidates and elected officials are accountable for following through on solutions and not just platitudes.”

CTC still drawing bipartisan support

A robust expansion of the child tax credit was part of the pandemic-era 2021 American Rescue Plan Act, which lifted 4.3 million people – including 2.3 million children – above the federal poverty line, the CBPP has reported. The impact of the 2021 expansion was more extensive because the maximum credit was increased about a thousand or more dollars and the credit was available even to low-income families who did not have a parent working.

That expansion expired just a year later in 2022, but it still made a profound impact on Thomas’ life.

The Indianapolis single mother of five was able to put a little of the tax credit payment aside each month and eventually saved enough to buy a two story home in Cumberland with a yard and enough bedrooms for everyone. Previously, her family was crammed into a rented condo, and she constantly worried if the landlord would repair the things that broke, if an increase in rent would tip her family into homelessness, and if her children would disturb the neighborhood when they played.

Now, Thomas said, she does not have those worries and, instead, comes home each night, takes a breath of fresh air and relaxes. She points to the child tax credit as making homeownership possible for her.

“When you are able to have that extra relief, you are able to remove a lot of the other stress that you have on you,” Thomas said, explaining that relief from money worries helps people function better and think straight. “(You) have that confidence to go out there and make better of yourself and your family.”

The current child tax credit expansion keeps the work requirements that were not included the 2021 expansion. Plasterer said Republicans, who generally believe the government should not give money to people if they are not working, pushed for the benefit to be available only to families who are earning a paycheck, even if the annual income is just a few thousand dollars a year.

In 2025, the tax cuts enacted during the Trump administration are set to expire, which makes Plasterer a little optimistic that if the child tax credit is not expanded this year, Congress might pass it next year. The expansion is already popular among the Democrats and has garnered support from some conservative Republicans, such as Sens. Josh Hawley of Missouri and Rick Scott of Florida, he said. Even Indiana’s Young, he noted, has championed the current tax relief bill because it offers a research-and-development tax credit for businesses and a housing tax credit for low-income families.

However, Plasterer pointed out, the outcome of Nov. 5 will likely determine what actually does happen.

“A lot of this depends on how the election shakes out,” Plasterer said. “But CTC allies going to do everything they can to make sure that child tax credit expansion is in there.”

This story has been updated to reflect that supporters of the child tax credit include lawmakers on both sides of the aisle. 

Dwight Adams, an editor and writer based in Indianapolis, edited this article. He has been a content editor, copy editor and digital producer at The Indianapolis Star and IndyStar.com, and a planner for other papers, including the Louisville Courier Journal.

The Indiana Citizen is a nonpartisan, nonprofit platform dedicated to increasing the number of informed and engaged Hoosier citizens. We are operated by the Indiana Citizen Education Foundation, Inc., a 501(c)(3) public charity. For questions about the story, contact Marilyn Odendahl at marilyn.odendahl@indianacitizen.org.